BOSTON/NEW YORK (Reuters) - A long list of rival hedge funds is eager to tap the billions in outside money that Steven A. Cohen's SAC Capital Advisors is expected to return to investors by year-end.

Large hedge-fund firms structured like SAC, where Cohen allocates capital to dozens of portfolio teams that trade mainly in stocks, stand to benefit most from the ongoing insider trading probe, hedge fund industry investors and analysts said in a series of interviews. (Most did not want to be identified because of running or investing in funds that compete with SAC or have done business with it.)

Israel Englander's $18 billion Millennium Management, which has long had a rivalry with SAC, is the name that comes up most often as a possible alternative investment, the industry sources said. The firm also relies on a group approach where dozens of smaller portfolio teams, rather than one or two main managers, buy and sell securities quickly, often thousands of them.

Balyasny Asset Management, Visium Asset Management and Kenneth Griffin's Citadel, which all feature multi-manager trading teams, have also been named frequently as candidates for some of the estimated $3 billion to $4 billion expected to leave SAC, said industry sources.

Several people mentioned Hutchin Hill, a $1.1 billion firm run by former SAC Capital trader Neil Chriss. The firm employs a strategy similar to Cohen's and is taking money from new investors.

All five firms either declined to comment or did not return requests for comment.

A person who worked for a fund invested with SAC said investors had two options: They could stick with Cohen's trading style and move money to some of his direct competitors or spin-offs. Or they could switch strategies and allocate money to funds that make longer-term and often more-concentrated stock investments.

Industry insiders said there were thousands of possible choices in the $2.25 trillion hedge fund industry. Investors had until June 3 to tell SAC whether they wanted to exit the fund, making it one of the mostly hotly watched industry deadlines in recent memory.

A handful of people familiar with SAC Capital said it would take months for the money to be returned to investors. (A representative for SAC Capital declined to comment.) Several cautioned that it was far too soon to say with any certainty who might stand to benefit from Cohen's current woes, even though long-time SAC investors would probably prefer to find similar kinds of managers.

Investment committees usually take time to switch their asset allocations. Those that have liked SAC's roughly 30 percent annual returns and are not concerned about the decentralized investing model may want to stick with firms that have a kindred approach.

Millennium Management was built much as SAC was over the last two decades. Both firms are big: Millennium employs some 1,310 employees, including 810 investment professionals; SAC's respective figures are roughly 1,000 and 400. Englander's firm has returned an average 14.5 percent per year since its launch in 1989. The two firms have often vied for the same traders and portfolio managers, said people who know them both well.

Millennium paid $180 million in 2005 to settle charges of improper mutual-fund trading. It now has what some insiders are calling some of the toughest compliance requirements in the industry.

Blackstone Group Inc, which has $46 billion under management, recently notified Cohen that it intended to redeem most of its clients' $550 million investments. The firm invests money for pensions, corporations, foundations and wealthy individuals with dozens of prominent hedge funds.

A representative for Blackstone declined to comment.

Some of its clients have said they are becoming more sensitive to seeing one of their money managers in the news. Nine former or current SAC employees have been charged with or implicated in improper trading.

"What is in now are funds that are squeaky clean," with "excellent reputations and no sorts of legal problems," said Ferenc Sanderson, a partner with hedge fund advisory and research firm PrevInvest. "The funds that are run as platforms have pretty much fallen out of favor."

One manager, who asked not to be named because he might be in the running to get some redeployed SAC money, was blunter. "This is going to be the death knell for funds where you have 50 traders with their own profit and loss statements ... The government is going to make you responsible for them."

Industry experts agreed that the multi-billion-dollar hedge funds with the infrastructure to cater to institutional clients will be the ones to benefit as pension funds and others get out of SAC.

Adam Kahn, managing partner at headhunting firm Odyssey Search Partners, had another thought: "There are going to be a few very good managers coming out of SAC launching funds. Depending on how well these guys are known by investors, they may see some of that cash too."